Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Total stock‑based compensation expense consists of the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Restricted stock and restricted stock units (“RSUs”) expense	$	13,988	$	10,441	$	41,441	$	25,003
Bonus Plan expense (see Note 11)	3,847		7,305		11,729		21,444
ESPP expense (see Note 13)	634		565		1,809		2,394
Stock grants expense	—		—		600		450
Stock option expense	—		395		343		1,762
DCP elective participant deferrals expense (1) (see Note 12)	35		85		170		306
Total stock-based compensation expense (2)	$	18,504	$	18,791	$	56,092	$	51,359

(1)DCP elective participant deferrals expense excludes deferred incentive bonus payable pursuant to the Bonus Plan.

(2)As of September 30, 2023 and December 31, 2022, $4,656 and $7,300 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively.

Total stock‑based compensation expense is included in the consolidated statements of operations as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Cost of subscriptions and licenses	$	1,254	$	757	$	3,420	$	1,927
Cost of services	671		460		2,385		1,407
Research and development	4,977		6,754		14,687		17,693
Selling and marketing	3,244		2,014		9,057		5,657
General and administrative	8,358		8,806		26,543		24,675
Total stock-based compensation expense	$	18,504	$	18,791	$	56,092	$	51,359

Stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. Specifically for performance‑based RSUs, stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period based on the number of awards expected to vest at each reporting date. The Company accounts for forfeitures of equity awards as those forfeitures occur.

Stock Options

The following is a summary of stock option activity and related information under the Company’s applicable equity incentive plans:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Stock	Exercise Price		Contractual	Intrinsic
	Options	Per Share		Life (in years)	Value
Outstanding, December 31, 2022	3,794,515	$	5.57
Exercised	(2,656,554)	5.50
Forfeited and expired	(17,500)	5.68
Outstanding, September 30, 2023	1,120,461	$	5.74	0.5	$	49,771
Exercisable, September 30, 2023	1,120,461	$	5.74	0.5	$	49,771

For the nine months ended September 30, 2023 and 2022, the Company received cash proceeds of $10,590 and $6,855, respectively, related to the exercise of stock options. The total intrinsic value of stock options exercised for the nine months ended September 30, 2023 and 2022 was $102,667 and $89,532, respectively.

As of September 30, 2023, there was no remaining unrecognized compensation expense related to unvested stock options.

Restricted Stock and RSUs

Under the equity incentive plans, the Company may grant both time‑based and performance‑based shares of restricted Class B Common Stock and RSUs to eligible colleagues. Time‑based awards generally vest ratably on each of the first four anniversaries of the grant date. Performance‑based awards vesting is determined by the achievement of certain business profitability and growth targets, including growth in annualized recurring revenues (“ARR”), and actual bookings for perpetual licenses and non‑recurring services, among others. Performance targets are generally set for performance periods of one year to three years.

The following is a summary of unvested restricted stock and RSU activity and related information under the Company’s applicable equity incentive plans:


							Time-		Performance-
							Based		Based
			Time-				Weighted		Weighted
	Total		Based				Average		Average
	Restricted		Restricted		Performance-		Grant Date		Grant Date
	Stock		Stock		Based		Fair Value		Fair Value
	and RSUs		and RSUs		RSUs		Per Share		Per Share
Unvested, December 31, 2022	3,068,851		2,706,078	(3)	362,773	(4)	$	36.67	$	38.21
Granted	1,199,644	(1)	1,003,180		196,464	(5)	41.17		39.03
Vested	(780,084)		(622,924)		(157,160)		33.46		38.20
Forfeited and canceled	(180,944)		(143,620)		(37,324)		33.16		33.41
Unvested, September 30, 2023	3,307,467	(2)	2,942,714		364,753		39.06		39.15

(1)For the nine months ended September 30, 2023, the Company only granted RSUs.

(2)Includes 59,089 RSUs which are expected to be settled in cash.

(3)Includes 199,076 time‑based RSUs granted during the three months ended March 31, 2022 to certain officers and key employees, which cliff vest on January 31, 2025.

(4)Primarily relates to the 2022 annual performance period, except for 185,186 performance‑based RSUs granted during the year ended December 31, 2022 with extraordinary terms, which are described below.

(5)Primarily relates to the 2023 annual performance period, except for 13,367 additional shares earned based on the achievement of 2022 performance goals for performance‑based RSUs granted during the year ended December 31, 2022.

During the year ended December 31, 2022, the Company granted 185,186 performance‑based RSUs to certain officers and key employees, which vest subject to the achievement of certain performance goals over a three‑year performance period (the “Performance Period”). For each year of the Performance Period, one‑third of the performance‑based RSUs will be subject to a cliff, whereby no vesting of that portion will occur unless the Company’s applicable margin metrics (which, for 2022, was Adjusted EBITDA margin and for 2023 and 2024, will be Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin, excluding the impact of currency exchange fluctuations) also equals or exceeds the relevant target level for such year. Provided that the applicable margin targets are met, the total number of performance‑based RSUs that will vest is determined by the achievement of growth targets, which include growth in ARR, as well as actual bookings for perpetual licenses and non‑recurring services. Final actual vesting will be determined on January 31, 2025. The 2022 Adjusted EBITDA margin target for the performance‑based RSUs was met.

In 2016, the Company granted RSUs subject to performance‑based vesting as determined by the achievement of certain business growth targets. Certain colleagues elected to defer delivery of such shares upon vesting. During the nine months ended September 30, 2023 and 2022, 1,562 and 10,888 shares, respectively, were delivered to colleagues, and 28 and 23 additional shares, respectively, were earned as a result of dividends. As of September 30, 2023 and December 31, 2022, 7,829 and 9,363 shares, respectively, of these vested and deferred RSUs remained outstanding.

The weighted average grant date fair values of RSUs granted were $40.82 and $38.68, for the nine months ended September 30, 2023 and 2022, respectively.

For the nine months ended September 30, 2023 and 2022, restricted stock and RSUs were issued net of 137,675 and 81,301 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of $6,062 and $3,208, respectively.

As of September 30, 2023, there was $82,609 of unrecognized compensation expense related to unvested time‑based restricted stock and RSUs, which is expected to be recognized over a weighted average period of approximately 1.7 years. As of September 30, 2023, there was $5,648 of unrecognized compensation expense related to unvested performance‑based RSUs, which is expected to be recognized over a weighted average period of approximately 0.8 years.

Stock Grants

For the nine months ended September 30, 2023 and 2022, the Company granted 12,639 and 13,632 fully vested shares of Class B Common Stock, respectively, with a fair value of $600 and $450, respectively.

Equity Awards Subsequent to September 30, 2023

In October 2023, the Company granted 265,759 time‑based RSUs, which generally vest ratably on each of the first four anniversaries of the grant date. The unrecognized compensation expense related to these RSUs is approximately $13,000, which is expected to be recognized over a weighted average period of approximately 4.0 years.